7th Circuit Court of Appeals
Civil – Police/Excessive Force/Estate
Estate of Rudy Escobedo (deceased) (Raquel Hanic, Personal Representative of Estate) v. Officer Brian Martin, et al.
The 7th Circuit Court of Appeals found no reason to disturb a judgment in favor of several officers involved in a standoff and shooting death of a Fort Wayne man in 2005. Rudy Escobedo’s estate challenged the jury verdict and summary judgment for the defendants on excessive force claims.
In the early morning of July 19, 2005, Rudy Escobedo became suicidal and ingested cocaine. After calling his sisters, he called 911 to report he was suicidal. He barricaded himself in his bedroom in his 7th floor apartment in Fort Wayne. Officers tried to negotiate Escobedo out of his apartment to no avail. Eventually, a tactical team, knowing Escobedo was armed, threw several cans of tear gas into his apartment and entered his apartment. The officers threw two flash-bang devices in the apartment, with one thrown into his bedroom. The police believed Escobedo was going to shoot based on his actions in the bedroom, and two officers opened fire, killing him.
Escobedo’s estate sued the city of Fort Wayne and several of the officers involved. After a variety of motions were filed and a partial summary judgment was granted and appealed, the case went to trial on the excessive force claims, and the jury found in favor of the defendants. The District Court also granted judgment as a matter of law in favor of the defendants after the jury entered its verdict.
Escobedo’s estate appealed on several grounds, including that the 7th Circuit should reverse the grant of judgment as a matter of law to the defendant commanders on qualified immunity grounds because the court improperly weighed evidence and concluded that Escobedo posed a threat to the public. The estate cited the 7th Circuit’s opinion involving this case from 2010 that upheld denial of qualified immunity to the defendants on their motion for summary judgment.
“However, facts emerged at trial that caused the district court to conclude that ‘the police had a much greater concern that Escobedo was an imminent threat to others,’ thus changing its conclusion on the qualified immunity question,” Judge Daniel Manion wrote. “When we affirmed the district court’s summary judgment ruling, the facts concerning the degree of danger Escobedo presented were not nearly as developed as they were after trial.”
In its 45-page opinion, the 7th Circuit found the District Court did not improperly admit evidence unknown to the officers at the time they used force against Escobedo; that the court committed harmless error when it prohibited the estate from introducing evidence at trial of Escobedo’s death for purposes of calculating damages; there was no error in granting judgment as a matter of law on qualified immunity grounds to the defendant commanders nor to officer Scott Straub; and that the District Court did not err when it granted summary judgment in favor of officers Brian Martin and Jason Brown on the estate’s excessive force claim for shooting Escobedo.
Civil – Environmental Cleanup/Fund
Norman W. Bernstein, et al. v. Patricia A. Bankert, et al. and Auto Owners Mutual Insurance Co.
Finding the District Court erred in dismissing several claims made by the trustees of a fund to oversee cleanup of a contaminated site, the 7th Circuit Court of Appeals is allowing the lawsuit to proceed.
Norman W. Bernstein and other trustees of the Third Site Trust Fund sued the former owners of now-closed Enviro-Chem, their corporate entities and their insurers to recoup cleanup costs under the Comprehensive Environmental Response, Compensation and Liability Act, the Indiana Environmental Legal Action Statute, and more. None of the parties being sued have paid into the trust set up to finance and oversee cleanup, despite an alleged obligation to do so.
Chief Judge Richard Young in the Southern District of Indiana dismissed all claims at the summary judgment stage: Count I, a CERCLA cost-recovery action pursuant to 42 U.S.C. Section 9607(a); Count II, seeking a declaratory judgment under CERCLA of the defendants’ joint and several liability; Count III, a cost-recovery action under the ELA, codified at I.C. 13-30-9-2; Count IV, negligence; Count V, nuisance; and Count VII, seeking a declaratory judgment of coverage against the insurers. The complaint did not include a Count VI. In addition, Auto Owners filed a conditional cross-appeal to try to preserve a favorable outcome in the event of a reversal of the court’s final judgment.
In the 66-page opinion authored by U.S. District Judge Jon E. DeGuilio, of the Northern District of Indiana, sitting by designation, the 7th Circuit reversed the dismissal of counts I, II, III and VII.
“In Count I, the Trustees have made a timely CERCLA claim, under 42 U.S.C. § 9607(a)(4)(B), to recover costs incurred pursuant to the 2002 AOC. The Trustees’ Count II ‘companion claim’ for a declaratory judgment of CERCLA liability is therefore also reinstated. We find that the Indiana ELA claim contained in Count III is timely, and that the declaratory judgment claim contained in Count VII is not moot,” DeGuilio wrote.
“The district court committed no abuse of discretion in its handling of the summary judgment briefing process. Finally, we affirm the district court’s denial of Auto Owners’ motion for summary judgment on preclusion grounds. The trustees’ suit is reinstated and remanded for further proceedings consistent with this opinion.”
Civil – Evidence/Wrongful Conviction
Christopher Parish v. City of Elkhart, Indiana, et al.
Finding a District judge improperly limited critical evidence relating to an Elkhart man’s innocence during his trial for damages following his wrongful conviction, the 7th Circuit Court of Appeals ordered a new damages trial be held.
Christopher Parish was arrested when he was 20 years old in 1996 by Elkhart police and charged with attempted murder and armed robbery. He maintained his innocence throughout and was convicted based mainly on eyewitness testimony. Eight years after his conviction, an appeals court overturned it and ordered a new trial. He was 30 when he was released from prison. The government, after Parish rejected a plea deal to serve no additional jail time, dismissed the case.
Parish then sued the city of Elkhart and detective Steve Rezutko, who was lead investigator of the shooting, seeking damages for his wrongful conviction based on a violation of the Due Process Clause. He prevailed on the action and was awarded about $80,000 in total damages for the eight years he was wrongly imprisoned.
Parish sought a new trial, arguing the damages award was too low. Average jury awards for wrongful convictions are around $950,000 for every year of wrongful imprisonment. He also claimed the trial court erred in improperly limiting the evidence that he could introduce at trial which could show his innocence.
“A look at the evidence allowed and that withheld from the jury on the question of responsibility for the crime reveals that the deck was effectively stacked against Parish,” Judge Ilana Diamond Rovner wrote. “Significant testimony as to Parish’s guilt of the crime, and particularly the testimony of eyewitnesses identifying him, was admitted whereas testimony as to his innocence, including statements by those same eyewitnesses expressing their doubts as to that identification, was excluded. The result was that the jury was deprived of significant probative evidence as to the issue of Parish’s guilt or innocence.”
The 7th Circuit affirmed the jury’s determination of liability but vacated the damages awarded. It ordered a new trial on damages and Circuit Rule 36 will apply on remand. Costs on appeal are to be taxed against the city and Rezutko.
Indiana Supreme Court
Civil Tort – Prejudgment Interest
Margaret Kosarko v. William A. Padula, Administrator of the Estate of Daniel L. Herndobler, Deceased
Jacqueline Wisner, M.D. and The South Bend Clinic, L.L.P. v. Archie L. Laney
Hassan Alsheik v. Alice Guerrero, Individually and as Administratrix of the Estate of I.A., Deceased
Kathy Inman v. State Farm Mutual Automobile Insurance Company
In four opinions dealing with the award of prejudgment interest under the Tort Prejudgment Interest Statute, the Indiana Supreme Court found, among other things, that the TPIS applies to an action by an insured against an insurer to recover benefits under the insured’s underinsured motorist policy.
In Inman, Chief Justice Brent Dickson wrote, “we hold that the TPIS does apply to UIM coverage disputes because they are properly considered ‘civil actions arising out of tortious conduct’ as required by Indiana Code Section 34-51-4-1. We also hold that, because prejudgment interest is a collateral litigation expense, it can be awarded in excess of an insured’s UIM policy limits.”
Kathy Inman was involved in an automobile accident with Nicholas Shinnamon and settled with his insurer for the maximum of his liability policy. She sought an additional $50,000 from her insurer, State Farm, under her UIM policy, which State Farm denied. She then offered to settle her claim pursuant to I.C. 34-51-4-6. State Farm didn’t respond. She was awarded the $50,000 by the trial court, but the judge denied her request for prejudgment interest.
The justices upheld the trial court’s decision, which stated only “Request for interest denied.” The TPIS permits the court to award prejudgment interest but does not require it be awarded, Dickson noted. The justices found no basis to conclude the trial court abused its discretion.
The Supreme Court reversed the lower courts’ decisions to deny Margaret Kosarko and Alice Guerrero prejudgment interest. Kosarko was involved in an automobile accident with Daniel Herndobler and offered to settle the lawsuit, but no response was made by the defendant. Guerrero sued Dr. Hassan Alsheik for medical malpractice – and won at the trial court – following the death of her infant son after surgery.
In Kosarko, the justices held that the TPIS abrogates and supplants the common law prejudgment interest rules in cases covered by the statute and that Kosarko’s motion for interest should have been evaluated as provided in the TPIS. They sent the case to the trial court for reconsideration of the motion accordingly. Dickson noted that the trial court has broad discretion to determine whether to award the prejudgment interest and how to calculate it.
In Guerrero, the justices reversed the denial of prejudgment interest based upon a defective settlement letter. The high court found Guerrero’s letter did comply with I.C. 34-51-4-6, but it is up to the trial court as to whether it will award her prejudgment interest.
Finally, in Laney, the Supreme Court affirmed the denial of Archie Laney’s motion for prejudgment interest after a jury awarded her $1.75 million on a negligence lawsuit filed against Dr. Jacqueline Wisner and The South Bend Clinic. Laney’s letter did not meet the requirements for awarding prejudgment interest.
The justices also discussed the behavior of the parties’ counsel as the defendants argued that Laney’s counsel’s behavior was so unprofessional and permeated the entire trial as to prejudice it enough to warrant a mistrial.
“There were excessive objections by both counsel, over eighty by the defendant’s counsel and over thirty by plaintiff’s counsel. While objections are clearly permitted if made in good faith and on sound substantive grounds, repeated objections despite adverse rulings already made by the trial court are not appropriate. However, far more problematic for the trial judge in this case was the unnecessary sparring and outright contemptuous conduct of each attorney directed toward the other,” Justice Steven David wrote. “The record reveals at least five instances where the trial court judge had to admonish the attorneys about their behavior.”
He chastised both attorneys for acting in a manner unbecoming of the profession, writing, “The duty to zealously represent our clients is not a license to be unprofessional.”
The justices found the trial court did not abuse its discretion in denying the defendants’ request for a new trial as the conduct of the attorneys did not prevent the jury from rendering a fair and just verdict.
Criminal – Sentence/Child Molestation
John Kimbrough, III v. State of Indiana
Disagreeing with the Court of Appeals, which ordered a convicted child molester’s sentence cut in half, the Indiana Supreme Court reinstated John Kimbrough III’s 80-year aggregate sentence for molesting his former girlfriend’s two young daughters.
A jury convicted Kimbrough of four Class A felony and two Class C felony child molesting charges, but merged the Class C felonies into the Class A felonies. He received an 80-year sentence. A divided Court of Appeals ordered Kimbrough’s sentence revised to an aggregate term of 40 years after finding the trial court abused its discretion.
Justice Robert Rucker noted that the high court disagreed with the appellate judges for several reasons.
“First, it is certainly true that a trial court may abuse its discretion where the sentencing statement omits reasons that are clearly supported by the record and advanced for consideration,” he wrote. “But in this case the trial court’s sentencing statement did not omit consideration of Kimbrough’s lack of a criminal history.”
“Second, by describing Kimbrough’s lack of criminal history as a ‘substantial mitigating factor,’ and remanding this case with instructions to impose a reduced sentence, the Court of Appeals majority implicitly suggested the trial court should have given greater weight to this factor,” he continued.
“In summary, because the trial court correctly entered its sentencing statement in compliance with the dictates of Anglemyer and because the ‘appropriateness’ of a sentence has no bearing on whether a sentence is erroneous, the trial court did not abuse its discretion in imposing Kimbrough’s sentence. Further, Kimbrough did not seek review and revision of his sentence under Indiana Appellate Rule (7)(B).”
Civil Tort – Hospital Rates/Uninsured Patient
Abby Allen and Walter Moore v. Clarian Health Partners, Inc.
The Indiana Supreme Court ruled in favor of a hospital’s motion to dismiss a complaint brought by uninsured patients regarding the rates charged by the hospital, finding the patients’ complaint failed to state facts on which the trial court could have granted relief.
Abby Allen and Walter Moore brought a putative class-action complaint against Clarian Health Partners Inc. in 2010 on behalf of themselves and other uninsured recipients of Clarian’s services since May 2000. They claimed that the hospital breached its contract with them by charging unreasonable fees after they received medical treatment. Before receiving treatment, Allen and Moore signed the standard form of contract agreeing to pay their accounts, but the contracts didn’t specify a fee schedule. They were charged based on Clarian’s chargemaster rates.
The trial court granted Clarian’s – now Indiana University Health – motion to dismiss, but the Court of Appeals reversed in October 2011, finding the price for services rendered to be a missing and essential term of the contract.
But Justice Robert Rucker wrote that a contract doesn’t need to state a specific dollar amount for goods or services in order to be enforceable. He pointed out that the 3rd Circuit Court of Appeals has found that omitting a specific dollar amount is “the only practical way in which the obligations of the patient to pay can be set forth, given the fact that nobody yet knows just what condition the patient has, and what treatments will be necessary to remedy what ails him or her.”
The justices disagreed with the patients’ contention that their promise to pay “the account” for treatment is indefinite and therefore can’t constitute a price term for the hospital’s services.
“Many courts have addressed contracts similar to those of Patients’ and most have held that price terms in these contracts, while imprecise, are not sufficiently indefinite to justify imposition of a ‘reasonable’ price standard,” Rucker wrote.
The high court declined to extend Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), to actions for breach of contract and decided to align with courts that have recognized the uniqueness of the market for health care services delivered by hospitals.
By resolving the breach of contract claim, the justices didn’t rule on the patients’ declaratory judgment claim.
Civil Plenary – Landowner Issues/Environmental Damages
Hugh David Reed v. Edward Reid; Reid Machinery, Inc.; North Vernon Drop Forge, Inc.; Jennings Manufacturing Co., Inc.; Reid Metals, Inc.; Glen White; Douglas Dibble; et al.
The Indiana Supreme Court has affirmed in part and reversed in part the grant of summary judgment to various defendants involved in a landowner’s lawsuit seeking damages after a steel fabrication company deposited solid waste onto his property.
Hugh David Reed sought clean fill for his property on which he operates an auction barn and leases a portion to a nursing facility. In 2004, Reed made arrangements to have North Vernon Drop Forge deliver fill to his parking lot. While it was being dumped, Reed saw unexpected materials in the fill and suspended the dumping of Forge fill on his land.
After this incident, the Indiana Department of Environmental Management cited Forge for violations of environmental laws at its site. A test showed contamination on Reed’s property. IDEM later sent a notice of violation letter to Reed for violations of environmental laws stemming from the Forge fill. Reed hired a company to remove the contaminated soil and then filed a 14-count complaint against Forge, its employees Roger Crane, Douglas Dibble and Gen White, Forge owner Edward Reid, along with three other companies Reid owns.
The defendants and Reed moved for summary judgment on his complaints, including environmental legal action, illegal dumping and trespass. The trial court denied Reed’s motions and granted the defendants’ motions as to all claims, leaving for trial only Reed’s negligence claims and the claims of potential liability against Reid individually and Reid Machinery.
In the 35-page decision authored by Justice Robert Rucker, among other things, the justices affirmed the denial of summary judgment for Reed on his environmental legal action claim and reversed the grant of summary judgment for the defendants on the same claim. They also reversed summary judgment for the defendants on Reed’s claim for illegal dumping. The Rule 56 materials presented to the trial court demonstrated at the very least a dispute question of material fact on whether Reed consented to the dumping of solid waste on his property, Rucker wrote.
They found questions for the jury to decide regarding the nuisance count, so they reversed summary judgment for the defendants as well as on the trespass claims.
The high court affirmed summary judgment for the defendants on Reed’s unjust enrichment claim, as well as ruled it is up to a fact-finder to determine whether the separate corporate identities of Reid’s companies may be disregarded so that liability may be imposed on Reid personally, Jennings Manufacturing, and/or Reid Machinery.
Indiana Court of Appeals
Civil Collection – Lien Foreclosure
Ponziano Construction Services, Inc. v. Quadri Enterprises, LLC
The Indiana Court of Appeals found a Lake Superior judge erred in denying a construction company’s request to foreclose on a mechanic’s lien after the client withheld a final payment, claiming faulty work.Quadri Enterprises LLC, owned by Dr. Kamartaj Quadri, hired Ponziano Construction Services to build a medical office on the site of a pre-existing structure in Crown Point. The contract called for Quadri to pay Ponziano $144,900. After executing the contract, the two agreed to an addendum to make changes to the original plan that added $500 to the contract.Quadri agreed to pay Ponziano through a construction loan from Wells Fargo. It made the first two payments, but withheld the last payment because of concerns over quality of workmanship, including poor painting and countertop installation. Ponziano then filed a mechanic’s lien for $45,549.43 and filed a complaint alleging breach of contract and unjust enrichment and sought to foreclose on the lien and attorney fees. Quadri filed a counterclaim for breach of contract, slander of title and breach of implied warranty of good workmanship.The trial court awarded Ponziano $16,000 and attorney fees of $8,000. Ponziano appealed, arguing it is still owed $53,783 absent reduction. Quadri sought to reduce the amount owed by claiming damages due to delays in construction and defective work. But Quadri caused many of the delays by moving into the office before construction was complete and through her failure to file plans and designs with the state and city, Judge L. Mark Bailey wrote.Quadri presented evidence that the cost of fixing the defective work was $4,800, so that’s the only amount the company is entitled to as a set-off. The appellate court found $48,983.43 to be the appropriate amount owed to Ponziano: the $145,400 contract price, less the $91,616.57 already paid, minus the set-off.Because Quadri owes the builder $48,983.43, an amount in excess of the mechanic’s lien, Ponziano may foreclose on the entire amount of the lien, the judges held. They remanded with instructions to the trial court to enter judgment in favor of Ponziano for $48,483.43, order sale of the property subject to the $45,549.43 lien, and determine the existence, extent and outcome of a potential priority dispute between Ponziano and Wells Fargo.The appellate court upheld the $8,000 in attorney fees, finding that Ponziano is only entitled to recover the fees relating to its action to foreclose on the mechanic’s lien.
Domestic Relation – Spousal Support
Christine Banks v. Timothy R. Banks
Calling her interpretation of Indiana law incorrect, the Court of Appeals rejected a woman’s argument against the decrease in her spousal support and reminded her that “one cannot bleed a turnip.”
The COA affirmed the trial court’s reduction in the amount of spousal maintenance.
At the time Christine and Timothy Banks divorced in September 2000, the trial court determined that Christine was physically incapacitated and ordered Timothy to pay $500 per month to her as maintenance.
Timothy Banks filed a motion to modify and reduce his maintenance obligation in June 2011 because he was suffering from Crohn’s disease and unable to work. The trial court reduced his obligation to $40 per week or about $173.33 per month.
Christine Banks appealed, contending that under Indiana law, an award of incapacity spousal maintenance cannot be modified or reduced unless the incapacitated spouse’s health has improved. She stated there was no evidence that her health had improved since the time of the divorce.
The court noted this position is incorrect. Citing In re Trust Created Under Last Will and Testament of Mitchell, 875 N.E.2d 433, 435 (Ind. Ct. App. 2003), and Lowes v. Lowes, 650 N.E.2d 1171 (Ind. Ct. App. 1995), Judge Michael Barnes wrote the court has held that when determining whether there has been a substantial change in circumstances justifying modification of a spousal maintenance award, a trial court should consider the factors underlying the original award. These factors include the financial resources of the party seeking to continue maintenance and the ability of the spouse paying maintenance to meet his or her own needs.
“…where the obligor spouse’s reduction in income or deterioration in financial condition is the result of factors beyond his or her control, he or she should not be forced to continue paying maintenance at the level based on a higher income or better financial condition,” Barnes wrote. “One cannot bleed a turnip.”
Criminal – First Impression/Protective Order
Melissa Patterson v. State of Indiana
In a case of first impression, the Indiana Court of Appeals ruled the Indiana General Assembly was deliberate when it did not criminalize the violation of a protective order by the protected person.
The COA reversed and remanded the trial court’s denial of a motion to dismiss two counts of aiding, inducing, or causing invasion of privacy as a Class A misdemeanor.
Melissa Patterson obtained a no-contact order against her finance, Gregory Darden, following an incident of domestic battery. Twice afterward, Patterson was found with Darden and was arrested for violating the no-contact order.
She argued the trial court erred in denying her motion to dismiss the charges of aiding, inducing, or causing the invasion of privacy because the Legislature did not intend for I.C. 35-46-1-15.1 to criminalize the conduct of a protected person under the no-contract order in question.
The COA agreed, holding Indiana’s statute does not criminalize a protected person’s actions that invite or acquiesce in the violation of the no-contact order by the subject.
“The bottom line is that our General Assembly has made it abundantly clear that it recognized the possibility that orders intended to protect persons from domestic violence are issued in settings in which the protected person might invite the subject of the order to enter the forbidden zone and thus violate the order,” Judge Ezra Friedlander wrote. “Its failure to criminalize activity that, in two separate instances, it recognized might invite a violation of the order, must be viewed not as an omission, but as a determination that such should not be criminalized.”
Judge Rudolph Pyle III dissented, contending the plain language of the statute permits the prosecution of a protected person who deliberately helps another disobey a court order for protection.
“While the majority’s policy position may, in fact, be consonant with the General Assembly’s intent, I believe it should be left for the legislative branch to explicitly exclude the prosecution of protected persons,” he wrote.
Civil Tort – Insurance/Workplace Injury
Granite State Insurance Company v. Robert Lodholtz and Pulliam Enterprises, Inc.
Whether a general liability carrier could intervene in a workplace injury lawsuit that awarded a plaintiff $3.9 million is a question that divided the Indiana Court of Appeals, which affirmed the lower court ruling.
Granite State Insurance Company was the carrier for Pulliam Enterprises, where Robert Lodholtz was seriously injured. When he sued, Granite State assigned the matter to a claims administrator who failed to respond to Lodholtz’s claim. The court entered a default judgment on his behalf and later a $3.9 million damages award.
Granite offered to represent Pulliam in an effort to vacate the default judgment and settlement while reserving the right to deny judgment – an offer Pulliam did not accept. Pulliam settled with Lodholtz.
“In a case that brings to mind the admonition, ‘Be careful what you wish for, you may receive it[,]’” we conclude that the trial court did not abuse its discretion in denying Granite State leave to intervene,” Judge Cale Bradford wrote in an opinion joined by Chief Judge Margret Robb.
The majority held that because Granite State reserved a right to deny coverage in its offer to represent Pulliam, it had an interest that was at best contingent and insufficient to support intervention.
Dissenting Judge John Baker said Granite State had demonstrated an interest sufficient to support intervention. “Its interest is not currently being protected, thus satisfying the requirements of Indiana Trial Rule 24(A)(2).
“I part ways with the majority’s view that Granite State sought to intervene simply ‘because it did not like the results’ when Pulliam and Lodholtz settled,” Baker wrote.
Criminal – Speedy Trial
Timothy Schepers v. State of Indiana
A criminal defendant who filed motions on his own behalf and who also had consented to appointment of a special public defender was not denied a speedy trial when a delay of more than 70 days occurred, the Court of Appeals ruled.
Timothy Schepers brought an interlocutory appeal on the argument that a violation of Criminal Rule 4 had occurred. Schepers was charged in May 2011 with several drug offenses and a Class C felony count of neglect of a dependent. After he dismissed his first public defender, a special public defender was appointed for Schepers. When Floyd Circuit Judge J. Terrence Cody set the trial date for Oct. 31, 2011, Schepers filed a pro se motion to dismiss the charges, claiming a violation of speedy-trial requirements. The trial court denied his motion.
“Schepers was still represented by counsel when he filed his pro se motions, and Schepers’s filing of those motions did not amount to a request to proceed with hybrid representation,” the Court of Appeals held in a unanimous nine-page order. “Additionally, Schepers’s subsequently-appointed counsel acquiesced to a trial date that was set beyond the seventy-day rule. For these reasons, we conclude that the trial court properly denied Schepers’s motion to dismiss. We therefore affirm and remand this cause for trial.”
The court cited the standard of Jenkins v. State, 809 N.E.2d 361, 367 (Ind. Ct. App. 2004), holding that when counsel is appointed, a criminal defendant speaks to the court through his attorney. “Schepers did not clearly and unequivocally assert his right to self-representation. Therefore, the trial court properly denied Schepers’s motion to dismiss on this basis,” Judge John Baker wrote for the panel.
Civil Plenary – Evidence/Title Insurance Premiums
Stephen W. Robertson, Ins. Comm. of the State of Indiana, on behalf of the Indiana Dept. of Ins. v. Ticor Title Ins. Co. of Florida, n/k/a Chicago Title Ins. Co.
After finding a trial court exceeded its authority when it reweighed evidence presented to a hearing officer regarding overcharging of title insurance premiums by several agencies, the Indiana Court of Appeals reinstated the administrative order issued by the Indiana commissioner of insurance to refund excessive premiums.
A hearing officer appointed by the Indiana Department of Insurance conducted an investigation into independent non-affiliated agencies operated in the state by Ticor Title Insurance Co. of Florida to see if the company was charging potentially excessive and discriminatory title insurance rates to Indiana customers. The hearing officer found the rates were excessive and discriminatory and ordered Ticor to refund excessive premiums, pay unpaid premium taxes and establish an internal control process to ensure that the appropriate premium is charged to Ticor’s customers.
Ticor sought judicial review, and Marion Superior Judge David Dreyer reversed, finding the hearing officer applied an arbitrary rate-making standard and, therefore, erred when it found Ticor charged premiums or rates that were unfairly discriminatory. Dreyer also found the hearing officer erred when concluding that Ticor failed to properly monitor its non-affiliated operations’ compliance with the Real Estate Settlement Procedures Act and when it included settlement charges in its calculation of Ticor’s premium tax obligation.
Judge Paul Mathias noted that the hearing officer for IDOI and Dreyer applied differing interpretations of the rate statute, I.C. 27-4-1-4(a)(7)(C)(i). The appellate court found IDOI’s interpretation of the statute – that insurers should be charging comparable insurance premiums to insureds purchasing the same amount of title insurance – to be reasonable. Ticor even acknowledged that its agents should have been charging its Indiana customers the same rates for the same amount of title insurance.
The judges found Ticor had actual authority over its agents for the purpose of selling and issuing Ticor’s title insurance policies and that substantial evidence supports the administrative hearing officer’s conclusions.
The judges remanded for further proceedings consistent with the opinion.
Civil Plenary – Insurance/Landlord-Tenant
LBM Realty, LLC, d/b/a Summer Place Apartments v. Hillary Mannia
Because Indiana law does not currently preclude a landlord’s insurer from bringing a subrogation claim against a tenant and a landlord’s complaint established a set of circumstances under which it would be entitled to relief, the Court of Appeals reversed the grant of a tenant’s motion to dismiss. The landlord’s insurer filed a subrogation action against the tenant after a fire started on her patio.
Hillary Mannia lived in Summer Place Apartments in Granger. In July 2010, a fire caused nearly $745,000 in damage at the apartments. LBM Realty, owners of the apartments, sued Mannia, alleging breach of contract and negligence in that she “carelessly and improperly disposed of smoking materials by placing same in a plastic bottle and in close proximity to the vinyl siding on the balcony patio wall of the leased premises …” or allowed guests to do the same.
Mannia filed a Trial Rule 12(B)(6) motion to dismiss LBM’s insurer’s action – which was filed in LBM’s name – to recoup the money it paid for the property damage. She wanted the trial court to adopt the “no-subrogation” or implied co-insured approach which, absent an express agreement, would find the tenant is presumed to be co-insured under the landlord’s policy. LBM claimed that the lease contained language suggesting Mannia bore the risk of the loss for her negligence.
The trial court granted her motion to dismiss, adopting the no-subrogation approach.
“Despite the current state of Indiana law that permits insurers to bring a subrogation claim against a tenant, the trial court did not test LBM’s complaint against the backdrop of the law as it existed. Instead, the trial court adopted the no-subrogation approach, thereby precluding LMB’s claims against Mannia. It seems that the trial court put the proverbial cart before the horse by first adopting a rule precluding subrogation claims against tenants and then reviewing LBM’s complaint in light of that newly adopted rule,” Judge Rudolph Pyle III wrote.
“Whether the no-subrogation approach, pro-subrogation approach, or case-by-case approach should be adopted in this State is a matter we leave for another day as the facts in this case are limited at this juncture of the proceedings and have not been developed enough to enable a meaningful review of the issue,” he continued, ordering the case to continue for further proceedings.•